FOREX-Dollar hits one-month high on rate-hike view, sterling falls

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* Dollar index reaches highest since mid-May
* Sterling slides after rates signal from BoE's Carney
* Fed's Dudley says wages, inflation should pick up
(Updates market action; changes dateline, previous PARIS)
By Richard Leong
NEW YORK, June 20 (Reuters) - The dollar reached a one-month high on Tuesday
against a basket of currencies on the view the Federal Reserve may raise
interest rates once more this year, while sterling tumbled after the Bank of
England's head threw cold water on the notion it was close to raising rates.
The greenback grinded higher in the aftermath of comments from New York Fed
President William Dudley on Monday who said further improvement in the U.S.
labor market would kindle inflation, which has shown signs of flagging in recent
months. This would leave the door open for the possibility of another rate hike
by year-end after two hikes so far this year.
The U.S. central bank as expected raised key overnight borrowing costs by a
quarter point to 1.00-1.25 percent last Wednesday.
"We had a hawkish Fed last week. We seemed to have had a delayed reaction as
the dollar had been oversold," said Mazen Issa, senior currency strategist at TD
Securities in New York.
Since last week's Fed meeting, a few policy-makers expressed caution about
another rate increase in the coming months due to a recent string of
disappointing inflation data.
Chicago Fed President Charles Evans said on Monday it may be worthwhile for
the U.S. central bank to wait until year-end to decide whether to raise interest
rates again.
"Bill Dudley commonly represents the majority view on the FOMC (Federal Open
Market Committee) - this is the main reason why the dollar is appreciating,"
said Commerzbank strategist Thu Lan Nguyen, in Frankfurt. "Evans was more dovish
but he's known to be dovish."
The index that tracks the greenback versus the euro, yen and four other
currencies was up 0.3 percent at 97.811 after touching 97.871 earlier
Tuesday, which was the highest since May 18.
The dollar fared best against the British pound among the group of
currencies. It gained more than a cent against the pound after BoE Governor Mark
Carney said now was not the time to raise U.K. interest rates. Last week three
BoE policymakers had voted in favor of a rate hike.
But Carney warned of weak wage growth and a likely hit to incomes as Britain
prepares to leave the European Union, sending sterling to a two-month low of
$1.2603.
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Currency bid prices at 11:56AM (1556 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1122 $1.1148 -0.23% +5.79% +1.1165 +1.1121
Dollar/Yen JPY= 111.5100 111.5100 +0.00% -4.59% +111.7800 +111.3200
Euro/Yen EURJPY= 124.02 124.31 -0.23% +0.71% +124.6300 +124.0500
Dollar/Swiss CHF= 0.9760 0.9754 +0.06% -4.11% +0.9764 +0.9726
Sterling/Dollar GBP= 1.2623 1.2732 -0.86% +2.33% +1.2757 +1.2603
Dollar/Canadian CAD= 1.3269 1.3216 +0.40% -1.20% +1.3284 +1.3205
Australian/Doll AUD= 0.7571 0.7594 -0.30% +4.93% +0.7623 +0.7573
ar
Euro/Swiss EURCHF= 1.0857 1.0874 -0.16% +1.31% +1.0881 +1.0852
Euro/Sterling EURGBP= 0.8809 0.8751 +0.66% +3.42% +0.8834 +0.8739
NZ NZD= 0.7235 0.7230 +0.07% +4.24% +0.7267 +0.7221
Dollar/Dollar
Dollar/Norway NOK= 8.5610 8.4999 +0.72% -0.88% +8.5656 +8.4634
Euro/Norway EURNOK= 9.5259 9.4776 +0.51% +4.84% +9.5335 +9.4414
Dollar/Sweden SEK= 8.7897 8.7414 +0.37% -3.49% +8.7988 +8.7257
Euro/Sweden EURSEK= 9.7786 9.7427 +0.37% +2.07% +9.7934 +9.7344
(Additional reporting by Jemima Kelly in Paris; Masayuki Kitano in Singapore;
Editing by Hugh Lawson and Chris Reese)